Monday, November 13, 2006



Engr. Md. Saidur Rahman
B.Sc. Engg (Civil), BUET, MIEB, MBA (DU)

[Please click here to download the Full Thesis]

The Bangladesh economy is burdened by major transportation constraints resulting from a combination of factors such as physical (geographical and historical), developmental (low-level investments and maintenance) and institutional-cum-policy framework-related. These lead to lower efficiency, higher transport costs, and more significantly, “transport unreliability”, with major adverse consequences for the economy. These are increased marketing risks, quality determination, and resulting lower price for farm products, which reduce producer incentives; failure of delivery schedules in exports affecting competition.

Bangladesh Railway (BR), a principal transportation agency of the country, is a Government-owned and Government-managed unique organization, serving a population of approximately 140 million living in an area of 1,55,598 square kilometers. As railway is a very important mode of inland transport, its healthy growth naturally contributes to the economic development of the country. But BR, at present, has been suffering from various operating bottlenecks. Critical analysis of the efficiency of BR points up the worsening operating ratio over the last decades. It’s continuing large deficit and the high level of direct and indirect Government subsidies is probably the single biggest issue forcing Government of Bangladesh in the transport sector.

The history of railway in the present geopolitical boundary of Bangladesh dates back to 15th November 1862,when a Broad Gauge (BG) single line was constructed and opened to traffic between Darsana and Jagoti near Kushtia. In the British India railway system, there was considerable expansion of railway network in this territory under the State and various Companies. The Meter Gauge (MG) network on the eastern side was mainly constructed to connect Chittagong Port with Assam and on the western side the network was Kolkata bound BG running down from the north. These two types of network remained isolated by the river Jamuna since the opening of Jamuna Multipurpose Bridge. But till now, a complete integrated railway system between two zones (East & West) does not exist. Besides, the present rail links of the two zones are not straight; rather they have huge rounding loops in many important sections.

Bangladesh Railway, is made up of truncated portions of the erstwhile East Bengal Railway and Bengal Assam Railway (of the then British-Indian rail system), which after 1971 War of Liberation fell in Bangladesh territory, inherited a number of structural and physical weaknesses as a part of its legacy, since it was not specially designed and constructed to serve Bangladesh. Due to truncation from the main system, BR is handicapped to serve the country effectively and efficaciously without proper re-orientation and development.

Since the liberation of Bangladesh, instead of constructing new rail-routes, some of the branch line railway sections were declared redundant and subsequently closed and no proper attention to maintain the existing asset was being given. Although huge development budget has been allocated for roads & highways sector, a little attention has been given to rail sector. More than 1200 kms rail lines are under risk for operation due to lack of proper maintenance. Besides, one of the major problems presently faced by the BR is a serious shortage of locomotives and route capacity. Thus BR was forced to face the uneven competition with other modes of transport. So it is a challenge for BR to eliminate its inherited structural & physical weakness and to make it a profit-driven market-oriented commercial organization under public ownership and control. Now, more than ever before in the long history, Bangladesh Railway is facing major threats to its long term survival: the progressive withdrawal of the government funding which has been necessary in the past to sustain railway infrastructure and services, and the relentless increase in competition from other transport modes, especially from road transport which has been assisted by different factors. The first of these threats, the withdrawal of government funding assistance, must and should be combated by more effective lobbying of governments by railway managements. The second threat, however, can only partly be countered by more effective lobbying. Competition from the road transport cannot be expected to reduce in intensity for the foreseeable future for its greater flexibility, and will only be effectively counteracted if rail can offer a standard of service which at the same time satisfies the needs of customers and is superior to that on offer from its competitors. Clearly this provides rail with a substantial challenge. It will require a major change in the outlook of railway managements and in the culture of railway organization. Henceforth, the activities of railway managements will have to be directed at: identifying, understanding and responding to the needs of their existing and potential customers; identifying and understanding the cost causation and profit potential associated with individual traffics or market segments; and bringing about the organizational change which will ensure that railways will satisfy new commercial goals. These guidelines are intended to assist the railway organization of the country to set up the systems and procedures necessary for BR to be able to function as commercially vibrant, market-led organization. All units of the organization must become and remain customer aware, and their activities must be harmonized and coordinated with the satisfaction of customers as the fundamental objective.

Finally, to enhance the efficiency of BR, proper attention will be given to this trust sector. Private sector involvement in operation and maintenance of BR should be encouraged. Government has to patronize the sector properly for its expansion and development. In the same time, operational & maintenance as well as overhead cost should be minimized, management should be efficient, and number of employees should be rationale. So, for the healthy growth and development of Bangladesh Railway, the unique mass transportation system of the country, a proper market-based reorientation is very much necessary.

This study sequentially analyzes different issues of Bangladesh Railway efficiency with an explanation of the specific importance of marketing to railways and suggests ways how to make the railway a profit-driven & market-oriented commercial organization under public ownership & control.